In a case involving overtime allegedly owed to sales reps, the U.S. Supreme Court held that the “preponderance of the evidence” standard applies when an employer attempts to show an employee is exempt from the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA).
Employer Claims Exemption
Several sales representatives for EMD, a company that distributes international food products in Washington, D.C., sued their employer for failing to pay them overtime. EMD conceded that the sales representatives worked more than 40 hours per week without receiving overtime pay but argued they were exempt under the FLSA’s “outside salesman” exemption.
The FLSA generally requires employers to pay employees a minimum wage and overtime compensation when they work more than 40 hours a week. It exempts many categories of employees from these requirements, however, including those employed “in the capacity of outside salesman.” Significantly, the burden is on the employer to show an exemption applies.
Lower Courts Apply Heightened Standard of Proof
At trial, the U.S. District Court for the District of Maryland held that EMD failed to establish by “clear and convincing evidence” that the employees were outside salesmen and thus exempt from the FLSA’s overtime-pay requirement. EMD appealed, arguing that the correct standard of proof was the less demanding “preponderance of the evidence” standard.
Although other federal circuit courts applied the preponderance standard, the U.S. 4th Circuit Court of Appeals upheld the use of the heightened “clear and convincing evidence” standard and denied further review.
Supreme Court Reverses
The Supreme Court reversed the appellate court’s decision and sent the case back to the lower court for further proceedings, holding that the appropriate standard of proof is the less stringent “preponderance of the evidence” standard.
Writing for a unanimous Supreme Court, Justice Brett Kavanaugh noted that, at the time Congress passed the FLSA in 1938, the default standard of proof in American civil litigation was the “preponderance of the evidence” standard, and it remains so today.
The Supreme Court further explained that a heightened standard of proof is generally applicable in only three circumstances, which are:
· When so required by statute;
· When so required by the Constitution, like in cases that involve a significant threat to liberty; and
· In rare cases involving the government’s attempt to take “unusual coercive action” against an individual, such as taking away a person’s citizenship.
The Supreme Court found that none of these circumstances was present in this case. The FLSA doesn’t impose a heightened standard, the case didn’t implicate constitutional rights requiring a heightened standard, and the dispute didn’t involve coercive government action.
Moreover, the Court flatly rejected policy-based arguments for a heightened standard, stating that, “rather than choose sides in a policy debate, this Court must apply the statute as written and as informed by the longstanding default rule regarding the standard of proof.”
EMD further alleged that the employees would still qualify as outside sales reps even when analyzed under the less stringent preponderance standard. But the Supreme Court left that issue for remand, reversing the 4th Circuit’s judgment and sending the case back for further proceedings. E.M.D. Sales, Inc. v. Carrera, 145 S. Ct. 34 (Jan. 15, 2025).
Key Takeaways
Employers asserting an exemption under the FLSA, such as the “outside salesman” exemption to overtime pay, must prove it by a preponderance of the evidence rather than by the more stringent “clear and convincing evidence” standard.
The default standard of proof in civil cases is the “preponderance of the evidence” standard. A heightened standard, like clear and convincing evidence, applies only when Congress or the Constitution requires it or in other narrow and rare circumstances, such as “unusual coercive action” by the government against an individual.
The unanimous opinion rejects policy-driven arguments about the appropriate standard of proof, instead making clear that the standard of proof is informed by the applicable statute and long-standing default rules.
Ben A. West is an attorney with Frost Brown Todd LLC and can be reached at bwest@fbtlaw.com. Molly Ryan, a law student at SMU Dedman School of Law, contributed to this article while working as a summer associate at Frost Brown Todd.